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CMS Delays the Inclusion of U.S. Territories Under MDRP Until 2020

The Center for Medicare and Medicaid Services (CMS) released an interim final rule (IFR), Medicaid Program; Covered Outpatient Drugs; Final Rule. The Rule delays the expansion of the Medicaid Drug Rebate Program (MDRP) to Puerto Rico and the U.S. Territories (collectively, “Territories”) for three years, until April 1, 2020.

The inclusion of U.S. Territories under the MDRP has been delayed to account for the need for more time and the complexity of the transition for both the Territories and manufacturers. Unless granted a waiver, this expansion will require the U.S. Territories to participate in the MDRP, and also will require participating manufacturers to include sales to customers located in the Territories in their calculations of average manufacturer price (“AMP”) and Best Price. This expansion means that participating manufacturers will likely pay rebates to Territories and include sales to customers located in the Territories in their calculations of AMP and Best Price, and to pay rebates on their covered outpatient drugs dispensed to Medicaid patients in the Territories beginning April 1, 2020.

This delay gives pharmaceutical manufacturers participating in the MDRP a great opportunity to comment on the proposed changes.

As we near the implementation date, it is imperative for you, if you are a pharmaceutical manufacturer participating in the MDRP, to have a clear understanding of how the expansion to U.S. Territories is likely to impact your products pricing and access.

The IFR is effective 15 November 2016; CMS will accept comments on the rule until January 17, 2017. If you are interested in a more extensive review of and in commenting on the Medicaid Drug Rebate Program (MDRP) section of the final rule, contact us!